"B.C. Policy Perspectives" is the web log of Mark Crawford. THE PURPOSE OF THIS BLOG IS NOT PARTISAN OR IDEOLOGICAL. INSTEAD, I TRY TO IDENTIFY POSITIONS AND PERSPECTIVES THAT ARE NEGLECTED, DROWNED OUT OR UNDERREPRESENTED ELSEWHERE. Some politicians and journalists have found it helpful and interesting, and I hope that you do, too!
This blog is linked to BOURQUE NEWSWATCH, THE TYEE, THE SIGHTLINE INSTITUTE, and The MARK NEWS. Check them out!!

Sunday, July 08, 2012

{This paper, written way back in 2000, discusses both the formal and
informal co-ordination of communications and policy functions in the B.C. NDP
governments, focusing on how this co-ordination changed during the period of
the Clark Government from 1996 to 1999.
After attempting to situate the Clark government historically in terms
of the evolution of cabinet structure and planning, I investigate four propositions about the
role of communications strategy in policy-making, which were based on my
impressions of the government gained as a Ministerial Assistant in the
government in 1996-97 and on journalistic accounts of the 1995-1999 period. Now, as we face the prospect of another NDP government, this time led by Adrian Dix, it is worth revisiting.}

I Structure
and Action: Cabinet Decision-Making under Clark

In 1995 and
1996, a fresh injection of personalized and centralized rule had considerable
appeal in several quarters in B.C.
Michael Harcourt's temperate manner and middle-of-the-road consultative
approach, which had been such a refreshing change after the Vander Zalm years,
was already wearing thin with the media and with many voters, and in the wake
of the NCHS scandal his personal approval ratings in public opinion polls had
fallen to 29 per cent. Glen Clark was
the consensus choice as the man most capable of beating BC Liberal leader
Gordon Campbell in a tough and possibly dirty 1996 election battle.[1] By denigrating Harcourt's style ("When
in doubt, strike a committee") the hostile media had unwittingly helped to
prepare a receptive audience to Clark's style: his decisive firing of BC Hydro
executives whose family members and NDP friends had benefited from inside
information about the privatized overseas Raewind Project appeared to end the
political fall-out from that scandal in a stroke; his upbeat economic plan
(`Investing in the Future'), which called for increased spending on
infrastructure, natural resource projects, and skills training, struck a
responsive chord with a large swathe of public opinion that had grown weary of
cutbacks, as did his renewed commitment to social spending (`BC Benefits') and freezing of ICBC auto
insurance rates and tuition fees. These initiatives contrasted sharply with
Campbell's talk of `more targeting' of social programs, `cracking down' on
welfare fraud, and limited privatization of crown corporations such as BC Rail,
which would have a disproportionate impact on interior
constituencies along the BCR route. Clark also adroitly passed the Education
and Health Collective Bargaining Assistance Act, which effectively prevented
public sector labour disputes during the election campaign; and presented an
attractive, and purportedly balanced, pre-election budget in the legislature
that was not debated because of the election call.

Given
this fleeting conjunction between internal and external constituencies in
favour of "action" and "bold and decisive" leadership, the
new Premier was well situated to implement an electoral strategy that
galvanized the NDP's traditional supporters while taking advantage of Gordon
Campbell's weakness outside of Greater Vancouver, where support for Jack
Weisgerber's Reform Party could be trusted to split the "free
enterprise" vote. The result was a narrow NDP electoral victory (39 seats
to the Liberals' 33 seats) based on a plurality of votes in a majority of
ridings, despite receiving a smaller plurality overall (39.5%) than did the
Opposition Liberals (41.7%).

Unfortunately,
Clark interpreted this early success not only as a validation of his
considerable political skills, but of his whole attitude toward governance and
decision-making. That this was a flaw of conception, and not just of execution,
was evidenced by the way in which the new premier constructed his inner circle
and concentrated power in its hands. Instead of following the longstanding
practice of placing a woman in the position of Deputy Premier, for example, he
named Dan Miller, who had endorsed his leadership bid and who shared his taste
for project-based job schemes and gambling expansion; Miller also held the important
post of Minister of Employment and Investment. In the Principal Secretary's
role, the new chief of staff and chief political advisor was not some sage
party strategist but Clark's young and equally ebullient erstwhile Ministerial
Assistant, Adrian Dix. Dr. Tom Gunton, also a personal friend of Clark's, was
named deputy minister responsible for coordination of policy and communications
functions, and rapidly became recognized as the most important official in the
government. What these moves demonstrated, besides simply a centralization and
personalization of power, was a basic confidence that what was most needed at
the centre was not a wider representation of opinion or advice but a greater
ability to act swiftly and to overcome opposition.

It is
interesting and useful to situate these developments in the historical
evolution of cabinet government in B.C. and elsewhere. Christopher Dunn observes that "[t]he development of
B.C.'s central executive has been as insular as its political culture"[1] but
also finds that it fits into a common pattern of institutionalization,
albeit one that is heavily influenced by variations in ideology and premier's
personality. Dunn's book provides a useful typology of cabinet structures and
decision making in B.C., starting with Paul Tennant's description of W.A.C.
Bennett's administration as exemplifying the "traditional" cabinet
and Dave Barrett providing a less
authoritarian version and still only incipient and transitional
institutionalization, termed the `unaided cabinet'; with full
institutionalization only coming during the Bill Bennett years, when expansion
of the Premier's Office, the growth of cabinet committees and central agencies,
and financial legislation evolved in order to contain the growth of government,
public sector unionism and the regulatory state in a way that balanced
collective and ministerial decision-making.[1]

Other
writers have fit subsequent premiers into this continuum. Both Morley[2]
and Blake[3]
depict Vander Zalm as having brought about a significant reversal of
institutionalization, although the cabinet committee structure was revived
after the resignation of the premier's influential Principal Secretary, David
Poole. Michael Harcourt, on the other hand, presided over an elaborate expansion
of cabinet committees and consultative bodies which, in Morley's words,
"became unhappily constipated."[4] It is against this background, and the
growing public perception that Harcourt was not a strong or decisive leader,
that Clark's move towards centralization and personalization, and the
now-infamous refrain of his supporters that "process is for cheese"[5]
was put into operation. Unlike Vander Zalm, Clark could point to both a
political context and an administrative need for indulging in a style of governance
that best suited his own personality.

It is
nevertheless striking that several of the hallmarks of the traditional cabinet
in the W.A.C. Bennett mould---planning that was sporadic, personalistic, and
project-oriented; a centralized mode of financial decision-making characterized by the Premier's control over
the budget process, financial information, special project funds, and
debt-financing procedures; and a personal determination by the

Premier to pursue an results-oriented
agenda of economic development and resource exploitation---returned during the
Clark Government. Of course, I am not saying that Clark completely scrapped the
comprehensive and formalized planning structures of the Harcourt government and
returned to the era of the unaided cabinet; but he did significantly modify and
simplify those structures, with the result that many decisions which were now
centralized could be made more quickly and decisively by the Premier's Office.
As compared to Vander Zalm's quixotic populism, this attempt to have "the
best of both worlds" may have been more successful than some critics
recognize (e.g. by consolidating central agencies and streamlining processes of
deliberation and consultation in a way that permitted many decisions to be made
more quickly, and which may have made many meetings of full cabinet more
meaningful), but it also sharply reversed the progress that had been made
during the Harcourt years towards inculcating procedural values and establishing "a culture of
openness."

The
Clark Government sought to seize the initiative away from entrenched interests
and a hostile media. That this newfound decisiveness was initially refreshing
to many British Columbians and yielded political dividends, most notably in
helping Clark to win the May 1996 election, is unsurprising; but that it would
just as quickly lose its political allure and effectiveness is equally so. The
more vigorously that personalized and results-oriented rule was pursued, the
more frequently and severely it clashed with the procedural values and ethical
norms encouraged by the Harcourt Government's structures of consultation and
its Freedom of Information (FOI) and Conflict of Interest legislation; with the
process values that had increasingly become the bread and butter of the trade
union, feminist, and environmental movements; and with the rising standards and
expectations of an increasingly diverse and volatile post-Charter electorate.

The
"co-ordination of communications and policy functions" during the
Clark period reflected this lack of
concern with process and consultation in favour of expeditious top-down
decision-making. It was felt that Harcourt not only was less verbally agile
than Clark, but that he had been a slow-moving target for Opposition and biased
media. What was required was a more aggressive, pre-emptive approach that could
turn the tables on the government's enemies by milking disproportionate
publicity, if possible, from Clark's "action", which was to be
focused principally on high-profile economic projects and negotiations, and by
being more aggressive about controlling information that could end up as the
subject of FOI requests and court actions later on. To appreciate this logic,
one must first examine the media wars which were waged successfully against
Harcourt, especially during the last two years of his government.

II. Background:
The Harcourt Years

Coordination of communications and policy
functions during the Harcourt government was complicated. Inside the formal
structure of cabinet decision-making, the Government Communications Office
(GCO) and Public Issues and Consultation Office (PIC) shared seats alongside
Treasury Board and Cabinet Planning Secretariat staff on the Cabinet Committee
Coordinating Group (GCCG), which vetted policy proposals coming out of the
various ministries. The GCO staff were also assigned to advise boards and
cabinet working groups on the public relations impacts of various issues as
they developed.[1]
In the Premier's Office, the September 1993 cabinet shuffle was accompanied by
a shake-up of the Premier's staff, which included the promotion of Chris
Chilton to chief of staff, John Heaney to the position of chief strategist, and
Sheila Fruman as director of communications. As Harcourt described it both at
the time and in his subsequent book, the chief purpose of the changes was to
"provide more direct, focused leadership", and to better enable the
premier to "set priorities, establish a plan and demand
accountability."[2]

The
following year was a relatively good one for any mid-term
government--particularly for a NDP government nearly always bothered by its
perception of a `biased' and `right-wing' media. Despite Harcourt's gaffe about
welfare cheats (referring to them as "varmints", which triggered about
two months' worth of negative publicity), some negative press attending the
formation of an inner cabinet (the so-called "Gang of Six"), and the
simmering issue of NCHS, the NDP ended 1994 with a respectable 36% approval
rating, only 3% behind the Liberals.[3] While land-use plans and the cancellation of
Kemano II (in January 1995) occasioned local opposition, they also enjoyed
broad provincial support. The
government's strategic document, Investing in Our Future: A Plan for BC
had the dual virtue of striking a pragmatic economic focus and being actually
rooted in the Premier's Summitt and Forum consultation process, rather than
being simply a product of GCO, PIC, or Premier's Office communication plans.

Nevertheless,
there was a definite feeling of frustration on the part of the NDP that their
"message wasn't getting out." There was even some sympathy for the
New Democrats fromthe more dispassionate members of the
media, such as the editors of the Globe and Mail: "Whatever its
method of accounting, the provincial deficit relative to GDP is around 0.5 %,
the second lowest in Canada. The resource sector is thriving. Vancouver is
booming. Investment pours in. With all this good news, why is Mr. Harcourt
behind in the polls?"[1]
The premier's attempt to counter
"the media's tendency to pick up on Gordon Campbell's one-not song
about the tax-and-spend NDPers and play it over and over again"[2]
was the televised "Town Hall Forum": a political and public relations
fiasco better remembered as "Black Wednesday". The intention was to
use a direct approach to tell British Columbians about the government's debt
management and deficit-cutting plans in front of an "open" and
"random" audience; the effect was to highlight Harcourt's
deficiencies as a television performer. The format had been approved by caucus
but was produced by NOW Communications, a firm headed by long-time NDPer Ron
Johnson, in cooperation with Chilton, Fruman, and other staffers.

The
fall-out from Black Wednesday included a
prolonged media investigation of the NDP's connections with NOW and Karl
Struble, a New York-based media advisor, and an investigation of a complaint by
conflict-of-interest commissioner Ted Hughes of the government's dealings with
NOW. And, at the end of a long tunnel that would include Robin Blencoe's firing
over a sexual harassment complaint, Moe Sihota's resignation for breach of the
Law Society's rules of ethical conduct, and the firing of Chris Chilton in the
wake of Auditor General George Morfitt's report on NOW Communications, was the release of the Parks Report on the
Nanaimo Commonwealth Holding Society ("Bingogate"):

I had taken
a lot of abuse and had met a lot of challenges over the years, but "Black
Wednesday" started the ball rolling for eight months of pure hell for me
and my family. It did not stop rolling until the autumn and my decision to
retire from political life.[3]

Harcourt's
resignation revived the NDP's fortunes by "taking the bullet" for
Bingogate and by setting the stage for a more dynamic leader. In a manner reminiscent of the stunningly
consequential televised leaders' debate of October 8, 1991,[1]
the contrast between Harcourt and Clark four years later seemed to be magnified
by the power of television, and it was masterfully capitalized upon by the top
NDP campaign strategists, most notably Clark, Gunton, Gerry Scott and (perhaps
above all) Hans Brown. But was it a formula that could be repeated, even
sustained over an entire 4-5 year term of office? If Clark's people attempted to apply this
electoral magic to the machinery of government and the processes of policy
formulation, would it merely correct the cumbersome nature of the
decision-making procedures and structures that Harcourt had in place by taking
advantage of the new leader's verbal agility and smarts, "improving the
co-ordination of policy and communications," or would it undermine the
fundamentally sound basis of consultation, priority-setting, and implementation
that most of the NDP and its supporters assumed would survive into the party's
second term---in effect, "throwing the baby out with the bath
water"?

The
author's lasting impression, based on the admittedly limited vantage point of
less than one year (1996-97) as a Ministerial Assistant during the first year
of the Clark government plus subsequent journalistic accounts, is that the
latter characterization has far greater validity than the former. No doubt the
inner circle had good reason to be impressed by the lessons of the 1991 and
1996 elections. The spectacle of Clinton's successful 1992 U.S. presidential
campaign (memorably captured in documentary film the War Room) must have
also resonated with Clark's youthful entourage, who emphasized the need for
rapid response, bold initiative, and agenda control. The evolution of various
electronic media throughout the province has brought along with it a growing
intensity of media scrutiny (and, in the eyes of New Democrats, a concomitant
amplification of media bias) which has the power to sway an increasingly
volatile electorate. The "one-step flow" of information analyzed by
Mark Sproule-Jones in order to explain the long-run stability of party
identification in B.C. politics in the postwar era[2] has given way to a new Machiavellian era that
demands even greater flexibility and ruthlessness on the part of political
strategists in order to cope with growing electoral instability.[3]

II. Four
Propositions Concerning the Co-ordination of Policy and Communications During
the Clark Government

1.There
was an increased subordination of policy-making and priority-setting to
communications concerns during the Clark Government.

The
basis for this proposition comes from both personal impressions of the 1995-97
transition period and journalistic accounts of the new government. A casual perusal of Tom Gunton's most
publicized acts indicate both a willingness to override bureaucratic revenue
estimates doubting the feasibility of a balanced budget when a balanced budget
was credible among voters,[1]
and to override officials' plans to
balance the budget when it "wouldn't be believed."[2]
The government's determination to win the war against the media was also
evident to the press soon after the election: "Clark's government
specializes in being in your face every day. The daily press release. The daily
announcement."[3]
But what effect did this emphasis on
pre-emptive action and agenda control upon the substance of decision-making?

Ministerial
assistants were instructed by the Premier's Office to spend more time on
regional and constituency-level communications concerns and to be less
preoccupied with their ministries than they had been under Harcourt.[4] Operatives in the Premier's Office frequently
stressed the political bounce

that could be gained from a well-publicized
rescue operation: the late night flight to Texas to "save Canadian
Airlines; the sudden trip to Oregon to make a bid for a B.C. Nike factory; a
Lear jet trip around the United States in search of investment money for B.C.
aluminum smelters.[1]
New Brunswick Premier Frank McKenna was pointed to as a good example of someone
who milked disproportionate publicity from modest job gains. The historical
association of province-building with the premier's development projects was
electronically up-dated for the 1990s.
The premier's deep commitment to job creation and job-creating
investment was never in doubt, but neither was the rider that he was to get
personal credit for it.

This
emphasis was also reflected in the structural changes that Clark brought to
government. Christopher Dunn uses the
term "PMO/PCO model" to describe the functional division between
partisan political and technocratic policy officials within the central
executive of western provincial governments in his study, The
Institutionalized Cabinet.[2]
"The development of a PMO-PCO split in the ECOs of the eighties has
brought political realism to planning orientations, and vice-versa."[3]
Cabinet design in the Harcourt government epitomized coordination between
specialized policy and political functions; one of the endogenous factors
underlying changes to cabinet structures under Clark was the need for
decongestion.[4]
The added dose of political realism that Clark and Gunton brought to cabinet
structure, however, reflected a
blurring rather than a consolidation of the PMO-PCO division.

The Cabinet
Policy and Communications Secretariat (CPCS or "cupcakes") which was
launched with the June 1996 cabinet shuffle combined activities that had
been spread over the Government
Priorities Committee (GPC, formerly PIC), the Government Communications Office
and the Cabinet Planning Secretariat; the first two had reported directly to
the premier's principal secretary or chief of staff, while the latter had been
headed by the deputy to the premier, Doug MacArthur. Now all three of these
bodies were recombined into 8 divisions of CPCS, all headed by appointees who
reported directly to Gunton. Gunton's new budget for CPCS in 1996-97 was $6.6
million, with Treasury Board authorization for 57 full-time staff (compared to
about $500,000 and 6 or 7 staff for Doug MacArthur's Deputy Minister's Office).
Communications was the largest branch, with 24 employees, and an additional separate division for "issues
management" for putting out fires was created.[1] To
be sure, over a third of CPCS was still grouped under "Policy"
(branches were designated for social policy, economic development and job
creation, resources and environment and fiscal and budget management, with the
latter playing a leading role in the 1996-97 spending review which sought to
cut $750 million out of the budget), and there were initially separate ADMs in charge of the
policy and communications shops.

Certainly
the impression I gained on the ground was of a giant PMO rather than a PMO/PCO
bifurcation. On those two occasions when the new Minister of Forests seriously
considered taking the ministry in a new direction that was at odds with
bureaucratic advice--first on the division of budget cuts between Victoria and
field stations, and then on the issue of whether and how to sponsor an
experiment in eco-forestry--there was no question of discussing their technical
feasibility with the land use group in the policy secretariat. In fact, I do
not recall once consulting with CPCS members on policy issues that could
challenge Ministry of Forests official advice. Consultations with CPCS (John
Horgan and Tim Pearson, et. al) were always about communications and
"issue management" in the media sphere.

The
changes announced to the organization of CPCS in October 1997, "to better
align our ongoing operational structures with government priorities and to
streamline the organization,"[2]
reduced the number of units in the policy division from 5 to 3 (economic,
social, and youth policy), and replaced some political appointees in the
communications division with career public relations officers. Significantly,
the two ADM positions which had been reporting directly to Gunton (Policy and
Communications) were eliminated, so that now there were 10 unit directors
reporting directly to the chief cupcake. The PMO/PCO split was further
attenuated with the units on the communications side of CPCS outnumbering the
policy components 2 to 1. Doug McArthur's subsequent departure and his
replacement by Gunton as the top deputy minister in the government seemed to
confirm the subordination of policy to communications within the CPCS, and
indeed within the whole of the cabinet offices. The naming of John Heaney (who
had been the communications point man for the Bingogate controversy) as
Gunton's successor in the post-Clark cabinet is further confirmation of this
transformation of the former cabinet planning secretariat.

2.There
was increased communications staffing and expenditure, particularly in the
Premier's Office and the Cabinet, Policy & Communications Secretariat, but
also at the ministry and caucus levels, which was disproportionate to the
growth in staffing and expenditures more generally and greater than generally
found in

other Canadian jurisdictions.

The
B.C. Liberal Caucus Research Office and the Leader of the Opposition have
periodically made claims about excessive communications spending by the
government,[1]
but it is difficult to show an accurate comparative basis for these claims, for
the simple reason that the Conservative governments of Alberta and Ontario are no
slouches when it comes to communications spending, either. Ministry communications branches were not
spared when it came time for staff and expenditure reductions in 1996-97, and
in fact those cuts may have contributed to the decision to shift more communications
responsibilities to CPCS.[2]

The
real issue is qualitative, not quantitative.
CPCS and the Premier's Office operated much like the Public Affairs
Bureau has in Alberta since being taken over by the Premier's Office,[3]overseeing
all government policy announcements and communications strategies.

3.There
was observable displacement of both incipient `procedural' norms and
`substantive' policy support in order to counter perceived problems of media
bias and vulnerability under the Freedom of Information Act, and in order to
aggressively pursue the imagery of "job creation" through activist
government.

The
pronounced tendency in the Clark government to ignore process has already been
noted. In addition, the Government's
constant concern to limit its vulnerability under the Freedom of Information
Act, and to limit the information available to potential litigants and
adversaries, may have been more consequential than is commonly realized. Most
of the time, this just took the relatively benign form of keeping as little

paper as possible. (For example, I was
chided and criticized for taking notes at meetings when I first started out as
a Ministerial Assistant, on the grounds that these notes could be requisitioned
under the Freedom of Information Act.)[1]
But this policy hurt Adrian Dix's credibility when he presented his literally
unique `memo to file' in an attempt to protect the premier against allegations
of conflict of interest concerning a friend's casino licence application---a
scandal that ultimately led to a criminal investigation and the premier's
resignation. Just as seriously, it
attracted the ire of the courts in a string of decisions that went against the
government: most notably, in the John Sheehan wrongful dismissal and Carrier
Lumber breach of contract cases.[2] In
both of those judgements the government actually had a fairly strong case,
which was fatally damaged by the government's own attempts to control and limit
evidence.[3]

When
a concern for rapid strike, agenda control, and limiting information is coupled
with an erosion of the PMO/PCO model, the potential exists for less informed
decision-making. Clark was unlikely to begin his mandate with a Royal
Commission on Employment or a Task Force on Forest Policy, preferring to engage
in hands-on negotiations and projects tied to his own personality (e.g. the
Jobs and Timber Accord). Some decisions were made too quickly to get timely and informed
feedback that could avoid costly mistakes--the Fast Ferries and Skytrain
extensions being two of the most obvious examples. Sometimes the opposite
strategy of slowing decisions down also had the effect of depriving the cabinet
of corrective feedback: the requirement that Gunton had to sign off on all
bills and government policy announcements so that each could have its own media
spin strategy coordinated from the centre sometimes helped to minimize negative
media coverage, but just as often created an impression of secrecy and a
potential for leaks.

4.The
Government was encouraged by the perceived early successes of its
communications strategies to intensify them. This ultimately backfired as they
conflicted with both procedural and substantive norms of the Government and the
New Democratic Party.

Both
steps of what I call the "Clark 1-2" (1. hit your opponents as
quickly as possible with a fait accompli, even if it means that to some extent
you are "shooting in the dark"; and 2. do everything possible to
delay them when they try to appeal or have input) had the effect of blinding
the Premier's Office to the true costs and consequences of its actions. (One
need only ask whether Clark and Company are glad that they delayed the
Auditor-General's Report on the "Fudge-it Budget" until 1999.) Both strategies were too responsive to the
short-run internal logic of political competition and too unresponsive to both
the complex demands of policy-making and the changing values of the electorate.
Part of this societal value shift has deeply involved key parts of the NDP's
own support base---trade unions, environmental groups, and feminists---who rely
on due process and adhere to procedural values as never before in history.[2]

III. Conclusions:
The Future of Communications-Policy Coordination in the B.C. Government

It
is ironic that two factors associated with the modernization of the electorate,
electoral volatility and constant electronic media coverage, encouraged a
leadership style that seemed in many ways to be anachronistic. If we do indeed
live in a new Machiavellian era, brought on by the circumstances of time-space
compression that underlie the Postmodern Condition, then we may see more
attempts a la Clark-Dix-Gunton to assert control over the flow of information
and the news agenda. But the lesson of the Clark Government is that these
strategies when they become detached from independent (legal, bureaucratic, and
democratic) criteria for policy-making easily become self-defeating. In the future, coordination of
communications and policy functions will have to concern itself more with
correcting for the unintended consequences of such strategies. More
fundamentally, it should also be concerned with reconciling the

growing need for political control with
growing public demands for public input and procedural fairness. That is going
to be a tall order.

End notes:

[1] For good brief accounts of Glen Clark's early months as premier and his victorious 1996 election campaign, see Daniel Gawthrop, Highwire Act: Power, Pragmatism, and the Harcourt Legacy (Vancouver: New Star Books, 1996), 347-50; and the articles by Terence Morley, Michael Prince, and Richard Sigurdson in R.K. Carty, ed. Politics, Policy, and Government (1996).

[3]These are the polling figures relied upon by Harcourt: "I was beginning to feel more `in the groove' for an election...I wanted to go for it if we got in to the thirty-four to thirty-eight percent range." Ibid., 132.

[1]"To many of us, it was another frightening reminder of the fragile nature of modern politics. We are no longer governed by facts, performance or principles, but by electronic images, style and timing." Ibid., 72.

[3]See Keith Grint, "Reengineering History: Social Resonances and Business Process Reengineering," Organization, vol.1, no.1, 1994, pp.179-201, for an interesting application of Machiavelli to the present period of `rapid and disjunctive change'in which "the old polarities of thought can no longer apply".

[1]Michael Smyth, "A high price for failure," The Province, June 16, 1999, A6.

[2]supra, 19.

[3]Ibid., 288.

[4]Ibid., 281-82.

[1]Budget '96 was of course the subject of a well-publicized and highly critical report by B.C.'s Auditor General George Morfitt: Government of British Columbia. Office of the Auditor General. 1998/98 Report 4: A review of the Estimates Process in British Columbia (Victoria: 1999).

[2]This quote was attributed to Gunton in a leaked document in 1998. The leak precipitated efforts to beef up security in the Policy & Communications Secretariat.

[4]This point was emphasized by Adrian Dix, the new principal secretary, when he hired new staff in the fall of 1996, and it was repeated several times at staff meetings. As he once told me, "If you have an appointment with a Deputy Minister and a media issue in the riding to respond to, you cancel the appointment."

[1]The author was a Ministerial Assistant to the Minister of Forests, the Hon. David Zirnhelt, in 1996-97.

[2]To be fair to Glen Clark, the Carrier Lumber decision concerned the cancellation of a timber licence made under the authority of cabinet ministers Dan Miller and David Zirnhelt during the time of the Harcourt administration.

[3]Other wrongful dismissal cases, such as social worker Joyce Rigaux's suit after her dismissal as a consequence of the Gove Inquiry, went against the government for reasons other than information control. These usually related to some aspect of due process, such as the government's wrongful neglect of Rigaux's rights in taking advantage of flaws in the BC Inquiry Act.

during the dead time between ministerial preparedness and CPCS approval.[1]

Monday, July 02, 2012

{This is a guest column by freelance writer Joanna Hayward. It provides a very good concise description of the euro crisis and what it means for Canadians--MC}

Last week, in the run up to G20, the Bank of Canada issued a stark warning concerning the potential impact of the deepening European financial crisis upon the Canadian economy. The bank, which has systematically raised concerns in relation to Canada’s inflated house prices and domestic borrowing rates, stated that:

‘If sovereign debt in Europe continues to intensify, it would further weaken global economic growth and prompt a general retrenchment from risk. In turn, the weaker global outlook would fuel sovereign fiscal strains and impair the credit quality of loan portfolios’.

‘Together these factors would increase the probability of an adverse shock to the income of wealth of Canadian households’.

The Euro Crisis Explained

The ‘Euro crisis’, or European sovereign debt crisis, is a continuing financial crisis whereby certain countries within the Eurozone (e.g. Greece) have been unable to refinance their government debt without support from third parties.

Several complex and combined factors have led to the European debt crisis. Examples include high risk borrowing practices which stemmed from high credit availability from 2002-2008, the globalization of finance against the backdrop of international trade imbalance and artificially high real estate prices. Global recession and fiscal policies for minimising its impact, including policies linked to bank bailouts, have also contributed.

Though each Eurozone member state theoretically retains sovereignty, individual economic outputs are intertwined through monetary and currency union. The interconnection between member states, currency union, the European Union and global financial systems exacerbates financial contagion. This means that, if one nation defaults on its sovereign debt, the creditor nation must face financial losses.

Debt protection can be linked to both the rising Eurozone crisis and the interconnection between its economies and other global economies. In the same way that individuals enter into income or mortgage protection insurance contracts, credit default swap contracts were entered into by institutions. These, contracts, designed to transfer credit exposure, created penalty agreements actionable upon a default of payment on certain debt instruments (including government bonds).

Understanding the Risk to Canadians

Pivotal to the bank’s concerns are Canada’s inflated house prices and high levels household debt, which, they believe, leave the Canadian economy vulnerable should there be a catastrophic financial shock in Europe. The bank’s report suggests that this vulnerability would prevent the Canadian markets from fully absorbing any further deterioration in global financial conditions within its trade, confidence and financial channels.

Further, the bank suggests that the impact of further deterioration in global financial conditions may have greater implications for Canadian households than the recession of 2008. As many households have since taken on further debt, house prices have continued to rise and oversupply of certain housing stock has increased, the bank warns of an increased risk of house price correction.

A hypothetical stress test used by the bank suggests a 3% rise in unemployment could result from further economic strain. This figure, which mirrors that of the last recession, would nearly triple the number of indebted households which would go into arrears.

Additionally, the bank has indicated that a European financial shock would likely bear upon the net worth of Canadians. Currently approximately 40% of Canadian household worth is directly linked to real estate values. Ten years ago, this figure was only 34%.

Individual Member States – What went wrong

With much public attention focused on European bailout decisions, the preceding economic behavioural patterns of individual member states often remains unexplained. Each member country has contributed, in some way to the current Eurozone status quo, either through its inability to refinance its government debt, or through its approach to monetary bailout.

Last week’s report by the Bank of Canada preceded a Greek election, the outcome of which was likely to determine whether or not Greece remained in the Euro. This election, leading into G20, raised significant economic concerns, both in Europe and beyond.

The Greek Example

The Greek economy, which had grown rapidly during the early 2000’s, was hit especially hard during the global financial crisis of 2008 as a result of its economic reliance upon shipping and tourism. During the recession, the Greek government spent heavily in a bid to support its economy but, in so doing, increased the country’s debt levels.

In 2010, the Greek government borrowed heavily from the EU and, consequently, its sovereign debt rating was slashed. Subsequent austerity measures caused anger amongst the Greek population, due in part to a sharp rise in unemployment rates. With the help of bank designed derivatives, Greece disguised its growing debt, deceiving EU officials.

Concern over the Greeks' ability or motivation to meet bailout terms has dominated discussions over the viability of the Euro. Following last week’s elections, Greek Conservative Antonis Samaras was sworn in as Prime Minister. He will lead a three party coalition, which aims to uphold the Country’s third-party bail out commitments.

This news has been cautiously welcomed by Canadian Officials, who left the G20 with an invite to join Pacific Trade Talks. Canadian Prime Minister Stephen Harper stated:

‘I am convinced that European Leaders fully understand what needs to be done’ he said. ‘The issue is now acting quickly and dramatically to actually take those steps’.

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Joanna Hayward is a 29 year old London-based business writer who covers executive ins and outs in the top companies around the world. As she regularly travels around performing interviews, Joanna loves nothing more than to tend to her garden during her spare time, her yearly crop of strawberries are her proudest achievement.

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On Knowing (1)

"The most perfect philosophy of the natural kind only staves off our ignorance a little longer: as perhaps the most perfect philosophy of the moral or metaphysical kind serves only to discover larger portions of it." ---David Hume

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